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Investors are looking for a solid base after market recovery

In the first quarter, stocks quickly went down, collapsed into the abyss, and escalated from the beginning to a modest end where they started. As traders first concluded that economic and business conditions were deeply depressed, and then, with the same certainty, conditions were much better than they had hoped for.

Standard & Poor’s 500 Index ended the quarter with a 0.8 percent gain after falling more than 10 percent. The benchmark index ended March at 2,059.74.

In this quarter there are also two halves for other assets, often resulting in investors even hike. The Russell 2000 index of smaller holdings, down 16% at one point, ended down 1.7%; Emerging market shares lost almost before closing nearly 7%; Crude oil fell by about 30%, then regained the entire deficit and more to finish 3 percent.

The investment advisers give convincing cases that the stock will trade as they did in the first quarter – either the first or the second, which may be both. Similarly, they argue that oil, emerging markets and other dead cats may have been for a second life or just bouncing. It is difficult to know what to prepare, because while psychology clearly changed in February, the economic indicators and prospects for the company’s results remained murky.

Mark Freeman, chief investment officer at Westwood Holdings, said: “The market is trying to find the fundamentals.” That will continue to grow throughout the year. The market is having difficulties with profit outlook. Until we better understand this issue, we will have time to market leaks. “

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What is clear about the income prospects is that it has gotten steadily worse. By the end of 2014, companies in S. & P. According to FactSet, a company that translates business and market data, 500 analysts are expected to earn $ 140.87 per share. Estimated decline in each subsequent quarter, reaching $ 120.34 by the end of March.

Even if income seems to be good, they may not really be so great. James Wilhelm, director of the Touchstone Focused Fund, said that as companies beat forecasts, it was generally through smart accountants who compared hand rather than business improvement.

He said: “Income is earned through acquisitions and lower taxes.” That is not the way to beat expectations. “

Stock acquisition increases earnings per share by dividing margins to a smaller number. There may be no real income.

However, as earnings expectations continue to be cut, stock prices will become more expensive, even when the market goes down. S & P. 500 ended the first quarter with earnings in 2016 about 17 times. With high appreciation and difficult profit growth, Wilhelm said, “We are quite cautious with the market.”

“There is not any safety for any bad news,” he warns.

“You have to have everything active” to make the market worthy of its current valuation, he says, “but that is not what is happening. Revenue growth is also not, relative to expectations. “

Richard Turnill, BlackRock’s global investment strategist, is more optimistic. He said there was much bad news for investors when thinking about the global economic downturn, he recalled, including the weakening of energy and industrial metals that reduced stock and stock depression. The votes of companies in those niches and fears that the global recession is likely to happen.

The downward move has highlighted the biggest declines in assets, including value stocks, emerging markets and commodities. That shows a steady attitude of convincing Turnill that the rally will continue.

“In the past six weeks, we have had a V-shaped recovery in risky assets along with a change in market leadership, indicating that the economy and markets have entered “A sweet spot where good growth and fear of recession have subsided, but there is no concrete evidence of inflation.”

The highway at the end of the first quarter helped local equity funds track Morningstar to erase most of their losses before that, but not all. They decreased by 0.1%, dropped 13.7% in the healthcare portfolio, 5.9% in the financial sector funds, 4.1% in the growth of the small company and 2.9% in the technology sector. .

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